Q&A Hero

Q: Warren Buffett is the CEO of: a. Home Depot. b. Berkshire Hathaway. c. Southwest Airlines. d. None of the above

Q: Who said, "Subprime mortgages can be productive and fruitful. We just have to put boundaries in place"? a. CEO of Citigroup b. CEO of Merrill Lynch c. North Carolina's Attorney General d. Alan Greenspan

Q: The failure of employees to deal with issues and concerns can result in conflicts and concerns that remain unresolved.

Q: The subprime loan market infiltrated investment firms: a. Because financial instruments were tied to mortgage and mortgage value. b. Because many of the investment firms were subprime lenders. c. Because investment firms had purchased many mortgages. d. Both a and c e. All of the above

Q: Some employees remain silent about issues they see and simply continue working at the company.

Q: A predatory loan: a. Is a loan that exceeds certain interest limitations or contains certain loan structures. b. Is any subprime loan. c. Can be affected by some state and local laws. d. None of the above

Q: Whistleblowers who turn to external avenues for dealing with issues are unethical.

Q: The subprime mortgage market grew : a. From $35 billion to $40 billion from 1994 to 2004. b. From $35 billion to $85 billion from 1994 to 2004. c. From $35 billion to $401 billion from 1994 to 2004. d. None of the above

Q: If whistleblowers do not have internal avenues for dealing with issues, they will quit or turn to external avenues.

Q: WorldCom's accounting scandal resulted from: a. Embezzlement. b. Capitalization of ordinary expenses. c. A downturn in the telecommunications market demand. d. Both b and c e. None of the above

Q: Whistleblowers have both internal and external avenues for dealing with issues.

Q: What auditor practice was stopped by Sarbanes-Oxley? a. Joint audit and consulting contracts for the same companies b. Auditing the same company for two years in a row c. CPA certification d. Compensation of auditors by their audit clients

Q: An industry practice that permits bill-padding is ethical.

Q: Arthur Andersen was convicted of what crime in relation to its work on Enron? a. Conspiracy b. Obstruction of justice c. Mail fraud d. All of the above

Q: What Enron accounting practice did Arthur Andersen label as medium to high risk? a. SPEs b. Mark-to-market accounting c. Officers as principals of other firms doing business with Enron d. a and c e. a, b, and c

Q: The KELP program at Tyco: a. Was not abused; accounting issues were unrelated. b. Was poorly supervised and administered. c. Violated federal law at the time. d. Was embezzlement.

Q: Dennis Kozlowski, Mark Swartz and Mark Belnick of Tyco: a. All feel that because they did not break the law that they were ethical. b. Were all convicted of various felonies. c. Were fired for trying to raise issues. d. None of the above

Q: Which of the following is not a form of earnings management? a. Timing of booking of sales b. Attaching values to contracts for purposes of booking revenue c. Shipping to warehouses to book sales d. Postponing booking returns e. All of the above are forms of earnings management

Q: You work in the finance division of a NYSE company. You have just learned that your supervisor has been using information on quarterly returns, prior to the time they are made public, to trade in the company's stock. You: a. Need not do anything because the SEC will eventually uncover his activities. b. Need not do anything because only officers are prohibited from trading on inside information. c. Must confront the supervisor. d. Must report the activity in some way.

Q: Which of the following is not a conflict of interest? a. A HealthSouth director with a $250,000 per year consulting contract with HealthSouth b. A HealthSouth director with a joint investment with Richard Scrushy c. A HealthSouth director who is also a physician d. A HealthSouth director who receives a $425,000 donation from HealthSouth to the charity whose board he serves on

Q: The total restatement of revenues at HealthSouth was:a. $1 billion.b. $1.5 billion.c. $2.0 billion.d. $2.5 billion.

Q: The HealthSouth "Pristine Audit" focused on: a. The accuracy of the revenue numbers. b. The patient billing and coding. c. Facility conditions and quality control. d. None of the above

Q: Who recorded phone conversations with Scrushy in order to document numbers manipulation? a. Leslie Scrushy b. William Owens c. Diana Henze d. None of the above

Q: How many CFOs did Scrushy have at HealthSouth from 1998 through 2003? a. One b. Three c. Four d. Five

Q: The "Monday morning beatings" referred to: a. Staff meetings with Scrushy about numbers performance. b. Staff meetings with Scrushy on facility upkeep and maintenance. c. Staff meetings in which managers who violated rules were dressed down. d. None of the above

Q: What was part of HealthSouth's vision statement? a. The health care choice for the rich and famous b. The hospital model for the future of health care c. Full service health care from diagnosis to physical therapy and recovery d. None of the above

Q: Prior to the Enron collapse, how many employees did Andersen have? a. 3,300 b. 7,000 c. 11,000 d. 36,000

Q: Who reminded employees of Andersen's document destruction policy? a. David Duncan b. Benjamin Neuhausen, the standards partner c. Nancy Templeton, the Andersen lawyer d. The SEC

Q: How did Andersen's lead defense lawyer describe David Duncan? a. "A client pleaser" b. "Someone who is free from corruption" c. "A straight shooter" d. Both b and c

Q: Who else did David Duncan consult about the off-the-book entities? a. Sherron Watkins b. His wife c. His pastor d. Both b and c e. All of the above

Q: Whom did David Duncan contact about the proposed off-the-books entities that Enron had proposed? a. The Justice Department b. Nancy Templeton c. Benjamin Neuhausen, a standards partner d. Both b and c e. All of the above

Q: What ethics code provision did the board waive for Andrew Fastow? a. Additional bonus payments beyond other officers b. Payment from an entity that Enron does business with c. Gifts from vendors d. All of the above

Q: David Duncan, the audit partner in charge of the Enron account for the Houston Andersen office: a. Was close friends with Andrew Fastow. b. Was close friends with Sherron Watkins. c. Was close friend with Richard Causey. d. None of the above

Q: How much of Andersen's Enron revenues came from consulting fees? a. $27 million b. $25 million c. $52 million d. None of the above

Q: How much of Andersen's Enron revenues came from auditing fees? a. $27 million b. $25 million c. $52 million d. None of the above

Q: Under Sarbanes-Oxley, who cannot be a member of an audit committee of a publicly traded company? a. Officer b. Outside lawyer for the company c. Consultant to the company d. All of the above cannot be a member of the company's audit committee

Q: Under Sarbanes-Oxley, when must a company file an 8-K? a. Every quarter b. Only when selling stock c. Annually d. Within one day of any changes listed in the statute

Q: Under Sarbanes-Oxley, how often must the auditor partner in charge of an audit client be rotated? a. Every year b. Every two years c. Every five years d. There is no rotation requirement.

Q: Under Sarbanes-Oxley, which of the following would be a conflict of interest for the outside auditor of a company? a. Providing management consulting services to the company, too b. Providing actuarial service to the company, too c. Designing the company's financial system d. All of the above

Q: Who in the following list did not declare bankruptcy? a. Burt Reynolds b. Billy Joel c. Lisa Lopes d. All of the above declared bankruptcy

Q: What loophole regarding consumer debts was closed by the bankruptcy reforms passed in 2005? a. Full exemptions for home, regardless of their size, were reduced to partial exemptions or additional requirements for residency b. Consumers could no longer declare bankruptcy c. Consumers had to surrender their homes to the bankruptcy court d. None of the above

Q: Who said, "It's a pity that this happened. Jett could have made $2 to $3 million honestly"? a. The former head of the SEC who headed up the case against Kidder and Jett b. Gary Lynch c. Jack Welch d. CBS Sixty Minutes

Q: Who was the CEO at GE at the time GE owned Kidder Peabody? a. Gary Lynch b. Edward Cerullo c. Jack Welch d. Linda LaPrade

Q: What was Jett's penalty for his actions at Kidder Peabody? a. He was sentenced to federal prison for 5 years b. He was banished from the securities business for life c. He was required to repay Kidder all the money he lost d. Both a and c

Q: What was the motto of the Kidder Peabody bond department? a. "Always honest." b. "Do it right and do it well." c. "Never question success." d. "The client first."

Q: The SEC concluded in the Jett decision: a. That Jett acted alone in his conduct. b. That Jett deceived Kidder Peabody. c. That Jett was able to adequately explain all of his profits and conduct. d. Both a and b

Q: Joseph Jett:a. Held his first job at Kidder Peabody.b. Held a Harvard MBA.c. Was convicted of securities fraud.d. None of the above

Q: Who was acquitted of charges for their work at Tyco? a. Mark Belnick b. Mark Swartz c. Dennis Kozlowski d. a and b e. All of the above were acquitted or released because of a mistrial

Q: When testifying about the company-financed decorations for his New York City apartment, Mr. Kozlowski said: a. The decorations were "godawful." b. The decorations were "expensive." c. That he should have supervised the decoration purchases more. d. b and c e. All of the above

Q: Who of the following were named CFOs of the year by CFO Magazine? a. Mark Swartz b. Andrew Fastow c. Scott Sullivan d. All of the above

Q: Who said, "We don"t believe in perks, not even executive parking spots"? a. Dennis Kozlowski b. Tyco's CEO following Kozlowski c. Patricia Prue d. Frank Walsh

Q: What other criminal charges did Kozlowski face beyond the Tyco issues? a. Insider trading b. Sales tax evasion c. Antitrust d. Money laundering

Q: Who warned Tyco officers about accounting issues and odd payments at Tyco? a. Frank E. Walsh b. Mark Belnick c. Patricia Prue d. Wilmer Cutler

Q: Which director had a conflict of interest in his acceptance of a broker's fee for a Tyco acquisition? a. Mark Swartz b. Patricia Prue c. Frank E. Walsh d. Mark Belnick

Q: Which of the following was not a Kozlowski expense that Tyco paid for? a. Jimmy Buffett entertainment at Mrs. Kozlowski's birthday party b. A $6,000 shower curtain c. Ice sculptures in Sardinia d. All of the above were Kozlowski expenses paid for by Tyco

Q: Which of the following accounting techniques did Tyco use? a. Spring-loading b. Inventory valuation changes c. Materiality d. Both a and b e. a, b, and c

Q: Which of the following officers raised concerns about loans to Tyco officers? a. Mark Belnick b. Mark Swartz c. Patricia Prue d. Karen Mayo

Q: What was KELP at Tyco? a. The name for its acquisition program b. The subsidiary that developed off-shore properties c. The officer loan program d. None of the above

Q: Tyco was originally founded: a. As a research lab. b. By Dennis Kozlowski. c. As a conglomerate. d. None of the above

Q: To whom did the internal auditor at WorldCom express concerns? a. No one; the head of internal audit was indicted as well b. Scott Sullivan c. Audit committee and the board d. Both b and c

Q: Who was held personally liable to WorldCom shareholders for their losses? a. NASDAQ b. The SEC c. WorldCom board members d. Jack Grubman

Q: Who said, "I felt like if I didn"t make the entries, I wouldn"t be working there"? a. Troy Normand b. Buford Yates c. Betty Vinson d. Cynthia Cooper

Q: What assets were the Ebbers permitted to keep when the court seized property to pay Ebbers' fines?a. $50,000b. Their homec. Their furnitured. Their silverwaree. a, b, and cf. a, c and dg. All of the above

Q: What was the total figure for WorldCom's earnings restatement? a. $3 billion b. $4.3 billion c. $6.8 billion d. $9 billion

Q: What happened to WorldCom when its accounting issues and restatements were announced? a. Its share price fell to 13 cents b. NASDAQ delisted the stock c. Congress revoked WorldCom's federal contract d. All of the above

Q: Which were not problems that resulted from WorldCom's high level of mergers? a. Merging billing systems was difficult b. Customer service concerns c. Collections suffered d. All of the above were problems

Q: The WorldCom board: a. Was known as "Bernie's Board". b. Consisted of experienced outsiders. c. Approved all loans to Ebbers before they were made. d. None of the above

Q: Who received the longest sentence in prison for their crimes? a. Andrew Fastow b. Jeffrey Skilling c. John Rigas d. Bernie Ebbers

Q: Who objected to WorldCom's practice of capitalizing ordinary expenses? a. Scott Sullivan b. Cynthia Cooper c. Bernie Ebbers d. Jack Grubman

Q: Which earnings management tool did WorldCom use?a. Transactional earnings managementb. Materialityc. Reservesd. Both a and ce. Both a and bf. a, b, and c

Q: How much did the WorldCom board loan Ebbers? a. $20 million b. $100 million c. $415 million d. $1.4 billion

Q: What was WorldCom's risk in relation to Mr. Ebbers' personal loans? a. Ebbers had conflicting business interests with WorldCom b. Embarrassment if the CEO did not repay his loans c. Loss of company control through creditor foreclosure on Ebbers' pledged shares d. The increase in the share price

Q: What would be the final merger for WorldCom? a. CompuServe b. GTE c. MCI d. Sprint

Q: What job did Bernie Ebbers hold while he was in Canada? a. Motel owner b. Junior high basketball coach c. Long distance operator d. None of the above

Q: Who said, "My actions caused my wife to go to prison"? a. Andrew Fastow b. David Delainey c. Jeffrey Skilling d. Ken Lay

Q: Who said, "I wish on my kids' lives I would have stepped up and walked away from the table that day"? a. Sherron Watkins b. Andrew Fastow c. Paula Reiker d. David Delainey

Q: Who said, "I considered [quitting] on a number of occasions. I was very well compensated. I didn"t have the nerve to quit"? a. Sherron Watkins b. Lea Fastow c. Paula Reiker d. David Delainey

Q: Who of the following people from Enron are still living as of 2010? a. Ken Lay b. Cliff Baxter c. Lea Fastow d. All of the above

Q: What happened to Mr. Skilling's case on appeal? a. Some of the guilty verdicts were partially reversed b. The verdicts and sentence were affirmed c. The U.S. Supreme Court found that the trial should have been held in another state d. The U.S. Supreme Court refused to hear the case

Q: How many years was Jeffrey Skilling sentenced to? a. 6 years b. 11 years c. 18.3 years d. 24.4 years